Pareto Analysis (80/20 Rule): Chart & Example
Definition
Pareto analysis ranks causes or categories from largest to smallest to show the 'vital few' that account for most of the effect — based on the 80/20 principle that roughly 80% of problems come from 20% of causes.
| Term | Pareto analysis (80/20 rule) |
|---|---|
| In Hindi | पैरेटो विश्लेषण (80/20 नियम) |
| Area | Production & quality |
| Search phrase | pareto analysis |
| Try it | NCR reports — top 3 problems |
पैरेटो विश्लेषण (80/20 नियम) — हिंदी में अर्थ
पैरेटो विश्लेषण कारणों को सबसे बड़े से सबसे छोटे क्रम में रखकर उन 'कुछ महत्वपूर्ण' कारणों को दिखाता है जिनसे अधिकतर असर होता है — इस सिद्धांत पर कि लगभग 80% समस्याएँ 20% कारणों से आती हैं।
How to make a Pareto chart
1. Collect data for a fixed period — defects by type, downtime by reason, complaints by cause. 2. Total each category. 3. Sort from highest to lowest. 4. Calculate each category's percentage and the cumulative percentage. 5. Draw bars in that order with a cumulative line on a second axis. 6. Work on the bars to the left of where the line crosses about 80%.
Keep 'Others' as the last bar however large it is, and choose the measure carefully — sometimes cost or downtime minutes, not count, shows a different priority.
Where it is used
NCR and rejection data, machine downtime reasons, customer complaints, overdue receivables by customer, stock value by item (ABC analysis is a Pareto of inventory value). The 80/20 split is a rule of thumb, not a law — the point is to focus effort where it pays most.
Example
200 weld-shop defects in a month: porosity 90, dimension out 50, spatter 25, burr 15, dent 10, others 10. Porosity and dimension are 140 of 200 = 70%; adding spatter gives 165 = 82.5%. Fixing those three removes over 80% of defects.
Related tools and guides
Frequently asked questions
What is the Pareto principle?
The observation that about 80% of effects come from about 20% of causes.
What is a Pareto chart?
A bar chart sorted from largest to smallest category, with a cumulative-percentage line, used to pick priorities.
Is ABC analysis the same as Pareto analysis?
ABC analysis is Pareto applied to inventory value — a few A items hold most of the value.
Is it always exactly 80/20?
No. It may be 70/30 or 90/10; the idea is that a few causes dominate.
Related terms
- 5 Whys (root cause analysis)The 5 Whys is a root cause analysis technique in which a team asks 'why?' repeatedly — typically about five times — starting from a problem, until it reaches a cause that, if fixed, stops the problem coming back.
- 5S5S is a workplace organisation method with five steps: Sort (Seiri), Set in order (Seiton), Shine (Seiso), Standardise (Seiketsu) and Sustain (Shitsuke).
- CAPA (Corrective and Preventive Action)CAPA stands for Corrective and Preventive Action — a structured process to find the root cause of a quality problem, fix it so it does not recur (corrective), and stop similar problems before they occur (preventive).
- DMAIC (Six Sigma)DMAIC — Define, Measure, Analyse, Improve, Control — is the five-step, data-driven problem-solving method used in Six Sigma to improve an existing process by finding and removing the root causes of defects and variation.
- First pass yield (FPY)First pass yield (FPY) is the percentage of units that pass a process step correctly the first time, without rework, repair or scrap. FPY = units passed first time ÷ units entering the step × 100.
- Fishbone diagram (Ishikawa)A fishbone diagram, also called an Ishikawa or cause-and-effect diagram, lays out all the possible causes of a problem in categories along the 'bones' of a fish whose head is the problem, so that a team can brainstorm and then test the likely ones.